Why has HMRC opened an enquiry into my tax return?

HMRC can open an enquiry into any Self Assessment return within the statutory window, and it does not need a specific suspicion to do so. Most enquiries follow some form of risk indicator, such as figures that look inconsistent with previous years, industry benchmarks, or third-party data HMRC holds.

A smaller number of enquiries are opened at random as part of HMRC's overall compliance strategy, to maintain a general deterrent effect and to check that its risk models remain accurate.

Section 9A of the Taxes Management Act 1970 gives HMRC the power to enquire into any part of a Self Assessment return, provided it gives notice within the enquiry window. That window is normally 12 months from the date the return was delivered, or from the filing date where the return was submitted late.

HMRC does not have to state its reasons for opening the enquiry, and there is no right of appeal against the decision to open one. Your right to challenge arises later, once HMRC issues a closure notice or makes an amendment you disagree with.

Behind the scenes, HMRC's Connect system cross-references data from banks, letting agents, online marketplaces, Land Registry, and international exchange under the Common Reporting Standard, feeding a risk score that helps HMRC prioritise cases.

A personal Self Assessment enquiry can run alongside, or lead into, questions about your company. HMRC frequently reviews director's loan accounts, dividend history and benefits in kind together with the personal return, since these figures should be consistent across both.

If your enquiry letter mentions dividends, loans or expenses reimbursed by your company, expect HMRC to request supporting company records as well as personal ones.

An enquiry itself carries no automatic penalty. Cost arises only if HMRC finds an error, in which case you may owe additional tax, interest, and a penalty depending on behaviour, or if professional support is needed to manage a lengthy enquiry.

Tax investigation insurance included with our Growth plans covers professional fees for handling a Self Assessment enquiry — see /fees for what is included.

Do not assume an enquiry means HMRC has already decided you have done something wrong. Many enquiries close with no changes at all once queries are answered.

Avoid providing more information than HMRC has actually asked for. Answer the specific points raised clearly, rather than volunteering unrelated detail that can widen the enquiry.

Do not miss the response deadline in the opening letter. A late or incomplete response can prompt a formal information notice and extend the enquiry unnecessarily.